After experiencing slight declines while generally hovering high last month, the daily hot metal production among the 247 Chinese steelmakers Mysteel regularly tracks is likely to see larger falls in November to range at 2.35-2.36 million tonnes/day on average, according to Mysteel’s latest report.
During October, steel mills in regions such as North China‘s Hebei and Shanxi, Central China‘s Henan, and Southwest China‘s Yunnan conducted maintenance works on some of their blast furnaces (BFs), as reported. Besides regular maintenance plans, some BFs were brought into the hot-idle mode when mills couldn’t bear the huge losses, they suffered from selling finished steel.
Mysteel’s tracking showed that the 247 steelmakers produced an average of 2.43 million t/d of hot metal during October 20-26, down by a modest 2.5% on month yet still being 3% higher than the level a year earlier.
In fact, the extent of the reduction in steelmakers’ steel production so far was not as substantial as many market pundits had expected, Mysteel Global observed.
For example, the average loss of selling rebar among steelmakers in Hebei has exceeded Yuan 200/tonne ($27.3/t) since mid-August and deteriorated to above Yuan 300/t last month, Mysteel’s tracking showed.
Nevertheless, “more mills in the country will be forced to bring their BFs offline next month, as the current stronger prices of iron ore than those of finished steel will lead to a deepening in mills’ losses,” a Shanghai-based market watcher projected.
Also, the pressure among some mills in North China from mounting stocks of finished steel will loom gradually because downstream steel consumption will shrink when lower daytime temperatures in the region slow outdoor construction activities, he added.
In this case, in November China‘s iron ore prices may end their previous strong performance with steel mills’ hot metal production being not high anymore, according to the source.
